Stock Market Technical Indicators & Analysis
These stocks from my IBD/MS watchlist all at least doubled their lows the past year. See list sorted by last column, close/low price past 250 days. Note the predominance of construction stocks.
This daily chart shows my new oversold bounce (OSB) indictor, designated by a black dot. Note also the green line break-out (GLB) last April.
And PHM, black dot and GLB!
I tweeted a few days ago about my analysis of new highs and lows and how it helped me to exit the market in November, 2021. I received many questions about how I compute these statistics and thought I would show you. I have created a New High and a New Low column in TC2000, my favorite technical analysis software. I then select the watchlist stored in TC2000 for all US stocks and sort it by each of the columns separately. When I sort by the New High column, all stocks with a check are at a new high. I scroll down to the end of the stocks with checks, click on it and then can see to the left its number. That tells me the number of new highs. I repeat the process for new lows.
The trick is to create a set of conditions that filter for new highs. You cannot use a TCD2000 PCF (personal formula) because any stocks that did not exist for the period in the formula will result in a null result. For example, if you try to calculate a new high in the past 250 days, any stock that did not have valid closes for the past 250 days would result in a null result. To get around this limitation you have to use the built in TC2000 conditions, Price New High and Price New Low.
Right click in a column in your watchlist and select Insert, true/false and then new condition. Then search on price new high and once added and the parameters are set, write 2 formulas. Here are the filter conditions I use. First set all conditions to days. Price History New High set to 250 bars and now. Next write the formula: V>10000 to eliminate stocks with very low trading volume. Write the formula C>10 to eliminate stocks closing less than $10. You can use alternative numbers if you wish.
Once you have entered these conditions, select the Display tab. Then choose check and any color you want the check to be. The default setting for updating is manual, change it if you want it to update automatically. Create a second column retaining all filters except substitute Price New Low condition for the New High condition.
Once you have created these two columns, select the US stocks built in watchlist and then sort each column. There should be about 6486 stocks in this watchlist. On Friday, there were 207 new highs and 10 new lows.
Every night after the close I calculate these and other statistics and add them to my spreadsheet. In November, 2021, I noticed that while QQQ was continuing its series of all-time highs, the number of new lows was surging. This factor, together with the knowledge that the markets had been red hot led me to exit the markets. It was a lucky call but when QQQ later entered a Stage 4 decline I was content to remain out of the market for over a year. Here is my spreadsheet from 11/2021. QQQ’s peak occurred on 11/22/2021, when there were 438 new lows. Column I shows my QQQ short term trend count. On11/22 it registered U-26, the 26th day of the short term up-trend, which I track in my daily blog.
Some readers asked what the pattern of yearly highs and lows is now. Here it is. There are very few new lows. Column G shows the number of ATHs (all time highs). Note that on Friday there were 207 new highs, 10 new lows and 78 at an all-time high. Friday was the 35th day in the QQQ short term up-trend.
The GMI remains Green and registers 6 (of 6).
If one can ride a sustained up-trend in the QQQ with TQQQ, it is possible to beat almost all other stocks. From day one of the QQQ short term up-trend that I announced on 4/28, TQQQ has advanced 29.6%. Only six of the Nasdaq 100 stocks did better. See this list, ranked by performance from 4/28 through Friday’s close. Did you buy any of them on 4/28?
If you could have successfully picked these 6 stocks on 4/28, then just ignore this strategy and maybe tell the rest of us how you do it. For most mortals, however, it is much easier to just buy TQQQ than to try to find the needle in the haystack that will outperform it. TQQQ also advanced more than all but 5 of the S&P500 stocks, shown below. In other words, TQQQ outperformed 99% of the S&P 500 stocks. I looked at my Market Smith Growth 250 watchlist from 4/13/2023, the watchlist closest to 4/28 that I have, and found that TQQQ even beat more than 90% of those promising stocks.
The moral of the story is this. Buy TQQQ instead of trying to predict in advance the small percentage of stocks that will beat it. Please keep in mind that TQQQ is triple leveraged and moves 3x as fast as QQQ, up or down. So one must have a valid indicator of the short term trend and know when to exit. I post my QQQ short term trend count almost every time I publish my blog and weekly in the GMI table below. (You can sign up to get my blog post by email, lower on this page.) This strategy has worked best if one buys TQQQ on Day one of a new short term up-trend and then pyramid up slowly. This is difficult to do psychologically because on Day one, by definition, the market trend is reversing from a down trend and it is often hard to believe a real change is occurring. The key is to start small on Day one and only add more TQQQ as the up-trend develops. If the new up-trend fails, I exit immediately. The media pundits who decry the triple leveraged ETFs just do not understand how well they work in sustained moves. SOXL advanced 57% during this period! While my TQQQ strategy has worked many times, past performance does not guarantee future performance, and be careful.
The GMI remains Green and is at 6 (of 6). I have been reinvesting my pension funds in mutual funds. At some point many of the people who withdrew from stocks in order to earn a “safe” 5% in their savings accounts will panic and race back into stocks at higher prices, when yields decline. So goes the game…..
